A business line of credit is one of the most valuable financial tools available. Here is exactly how to get one in 2025.
A business line of credit is one of the most flexible and valuable financing tools available to small business owners. Unlike a term loan, you draw what you need, repay it, and draw again -- paying interest only on what you use. Here's everything you need to know about getting one.
What Is a Business Line of Credit?
A business line of credit is a revolving credit facility with a set limit. Think of it like a credit card -- but typically with much higher limits, lower rates, and designed for business cash flow needs. You can draw funds at any time up to your limit, repay, and borrow again throughout the draw period.
Types of Business Lines of Credit
- Secured line of credit: Backed by business assets (equipment, receivables, real estate). Higher limits, lower rates. Typical: $50,000--$2 million
- Unsecured line of credit: Based on business creditworthiness without specific collateral. Faster to get, but lower limits and higher rates. Typical: $10,000--$250,000
- SBA CAPLines: SBA-backed revolving lines specifically for seasonal businesses and contractors. Up to $5 million.
What You Need to Qualify
- Time in business: Most lenders want 1--2+ years
- Annual revenue: Typically $100,000+ for $50,000+ lines
- Credit score: 620+ for online lenders; 680+ for banks and SBA
- Business bank account: 3--6 months of statements
- Positive cash flow: Monthly deposits must exceed monthly debits
How to Get a Business Line of Credit: Step by Step
- Check your credit: Pull personal and business credit reports and resolve any errors
- Gather documents: Tax returns, bank statements, financial statements
- Determine the right size: Don't over-borrow -- right-size the line to your actual cash flow needs
- Compare lenders: Bank lines (lower rates, harder to qualify) vs. online lenders (faster, higher rates)
- Apply and get approved: Banks take 1--4 weeks; online lenders often fund in 1--5 days
- Use responsibly: Draw for genuine business needs; repay promptly to maintain access
Line of Credit vs. Term Loan: Which Is Right?
Use a line of credit for: recurring cash flow gaps, seasonal needs, working capital, unexpected expenses. Use a term loan for: specific one-time purchases, equipment, expansion investments. See our detailed comparison guide.
Approvd helps business owners access lines of credit from our network of bank and online lenders. Use our loan calculator to model costs, then explore your line of credit options with no credit impact.
Frequently Asked Questions
How long does it take to get a business line of credit?
Online lenders can approve and fund in 1--5 business days. Bank and SBA lines typically take 2--6 weeks.
Can I get a business line of credit with bad credit?
Some online lenders offer lines to borrowers with scores as low as 600, though limits will be lower and rates higher. Building credit before applying significantly improves terms.
Do lines of credit have annual fees?
Many do -- typically $100--$500/year for maintaining the line, whether you use it or not. Factor this into your cost comparison.
Why a Line of Credit Is Often the Best Business Financing Tool
A business line of credit offers something that term loans don't: flexibility. With a term loan, you receive a lump sum and begin paying interest on the full amount immediately, whether you need all of it right away or not. With a line of credit, you draw only what you need when you need it, pay interest only on drawn amounts, and replenish availability as you repay. For businesses with variable cash flow needs, this structure is dramatically more cost-efficient.
Lines of credit work particularly well as a financial buffer — capital you establish during strong periods so it's available during slow ones. Banks and lenders don't make it easy to borrow money when you're struggling; they make it easy when you're doing well. Establishing a line of credit before you desperately need it is one of the most valuable financial moves a small business owner can make.
Types of Business Lines of Credit
Revolving vs. Non-Revolving
Most business lines of credit are revolving — meaning as you repay drawn amounts, that capacity becomes available to draw again. A $100,000 revolving line where you've drawn $40,000 has $60,000 available; repay $20,000 and you have $80,000 available again. Non-revolving lines work more like term loans: once drawn, repaid amounts don't restore availability. Always confirm which type you're getting.
Secured vs. Unsecured
Secured lines of credit are backed by business assets — accounts receivable, inventory, or real estate — and typically offer higher limits and lower rates. Unsecured lines don't require specific collateral but almost always require a personal guarantee. Most online business lines of credit are unsecured; most bank lines above $100,000 are secured against business assets.
Qualification Requirements
| Lender Type | Min. Time in Business | Min. Revenue | Min. Credit Score | Max Limit |
|---|---|---|---|---|
| Online Lender | 6 months | $10K/mo | 600 | $250K |
| Bank (unsecured) | 2 years | $250K/yr | 680 | $100K |
| Bank (secured) | 2 years | $500K/yr | 680 | $1M+ |
| SBA CAPLine | 2 years | Varies | 650 | $5M |
The Application Process Step by Step
Start by gathering your 3–6 months of business bank statements, your most recent business tax return, and a current P&L statement. Most online lenders can pre-qualify you in minutes with just bank account information, giving you an initial idea of available limit and rate before you commit to a full application.
For bank lines of credit, expect a more thorough process: a meeting with a relationship manager, full financial documentation review, and potentially a personal guarantee review including personal tax returns and a credit check. The extra documentation effort is worth it for the lower rates and higher limits that bank lines typically offer compared to online alternatives.
Get a Business Line of Credit Through Approvd
Approvd matches businesses with line of credit providers based on your revenue, credit profile, and industry. Compare multiple offers with clear terms — no hidden fees, no surprises. Apply in minutes and have your line in place before you need it.